NUS to tokenise its green bonds using blockchain

The National University of Singapore (NUS) will be tokenising its green bond credentials using blockchain technology.

Under the scheme, the university will convert its green bonds into digital tokens stored on blockchain. These tokens then become tamper-proof and trackable real-time – making sustainable investments transparent and accountable for those who buy these bonds.

The initiative is part of Project Guardian launched in 2022 and led by the Monetary Authority of Singapore (MAS).

Project Guardian is a collaboration between policymakers and financial industry focusing on tokenisation and digital assets, and one of its objectives is to explore public blockchains to store and trade digital assets in a regulatory sandbox environment.

As GovInsider previously reported, another government that is tapping on blockchain for green finance is Bhutan for its national carbon registry, which enables the country to securely and efficiently trade carbon credits on the global market.

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NUS’ green bonds

NUS is collaborating with digital assets platform provider, Northern Trust, as well as financial institution, United Overseas Bank (UOB), to tokenise one of the university’s green bonds.

NUS launched a framework on sustainable finance in April 2020 as part of its commitment towards its Climate Action Plan 2030. The framework provides the overarching criteria and guidelines for it to enter green finance transactions, such as green bonds and loans.

In March 2023, the university raised S$340 million from its third green bond. This was after a strong reception to its inaugural issuance in June 2020 and second issuance in June 2021.

With a fixed coupon rate of 3.268 per cent, the 10-year notes were fully subscribed to and will mature in 2033.

How tokenising green bonds with blockchain works

Northern Trust will provide the platform to store the green bond token, and the environmental impact reporting data for the 2023 green bonds that NUS issued.

For sustainability conscious investors who buy these green bonds, they “will receive complete set of information which will remain unchanged even as the bond changes hands,” according to the official statement by NUS.

Prior to using blockchain to tokenise the green bonds, bond issuers like NUS would have to manually and regularly update investors regarding the use of the funds.

UOB, as the lead arranger of the bond issuance, will gather and provide feedback on how the tokenised data affects investors’ sustainability reporting practices.

“By participating in this data tokenisation initiative, we aim to provide real-world feedback on the usability of tokenised data, ensuring that it meets the standards required for transparent and reliable sustainability reporting,” said UOB’s Head of Group Investment Banking, Edmund Leong, in the same statement.

More blockchain innovations expected through NUS

NUS is the first university in Singapore to tap on blockchain for sustainable reporting.

Its statement highlighted that this initiative is only the “first step” to the university’s broader strategy to explore how blockchain can enhance green finance practices.

Having signed a three-year agreement with Northern Trust, NUS said that the platform provider will collaborate with the Singapore Blockchain Innovation Programme (SBIP), a research lab at the NUS School of Computing.

“Research fellows and PhD candidates at School of Computing will be involved to brainstorm, design and develop the solution to support the development of talent in the fields of blockchain technology,” the statement added.

The collaboration seeks to leverage NUS’ academic and R&D expertise to create a green finance framework that enables issuers and investors to better verify ESG claims, as well as to meet regulatory requirements in their investment portfolios.